Chinese miracle is over

Now China will have to pay for its rapid growth.

Sooner or later, the “Chinese” epidemic will end. There is already an assumption that the second wave of this epidemic may await us in the fall, but it (the assumption) now looks extremely hypothetical, since the disease is still growing, and therefore it is very difficult to build some kind of model, reports usatodaynews.live.

The main question, of course, is about the consequences of this epidemic, and not even medical, but economic.

The severity of this epidemic is expressed in the fact that it demonstrated the critical problems of the Chinese economy that began before the outbreak of the disease, and which the coronavirus simply pulled out.

The key problem is a strategic development course, ideologically substantiated by Deng Xiaoping and finally embodied during the reign of Hu Jintao. It was in his ten-year period from 2003 to 2012 that the Chinese economy was pumping up money with the expectation that the export model would allow dumping the accumulated problems into foreign markets along with the expansion of Chinese goods. Until 2008, the model worked like a watch, but in 2008 this watch broke. Instead of rethinking the strategy and revising it, it was decided to pump even more money into the economy. If export markets stagnate, then we will accelerate the development of the domestic one. In the same way — pumping new, even more money into it.

But this strategy has a very obvious problem: the isolation of the system. If in the export version it was still possible to count on the dumping of entropy phenomena beyond the borders of the Chinese economy (although 2008 showed that foreign markets are external to the Chinese leadership, and therefore a factor beyond its control), then pumping money into the domestic market should have led and led to catastrophic consequences — a debt “canopy”. Today it makes up almost 300% of Chinese GDP, and these are absolutely unimaginable amounts. Only two countries in the world have similar debt in the order of magnitude — these are the USA and Japan. The United States has the ability to dump accumulated inflation outside of America (the dollar was and remains the world currency), Japan pays for its debt with a recession, from which the country can not get out for more than 20 years. And in the eighties and especially nineties, it was Japan that demonstrated the most powerful recovery of its economy. All of Hollywood was littered with films where Japanese corporations crushed America under themselves. But there was a crisis of the late nineties — and Japan was blown away.

China is now waiting for the same scenario. There are no miracles. The diagnosis is known, the crisis is in full swing. One can try to get out of it either through the slogan “even more money”, or admit the collapse of the strategy and start slowly (well, or how it works) to return the balance to the point of equilibrium. That with such a volume of debt it will be extremely difficult to do.

In hot weather, China first went along the first path. Throwing more than $170 billion of liquidity into the economy in the first month of the epidemic and lowering the interest rate. And then a little more. However, this is a treatment for the symptoms, not the disease itself, and the treatment is extremely dangerous. If the Chinese continue at the same pace, then they will last a year or two, after which it will be necessary to pour in even larger amounts or return to the original question about the nature of the disease and a clear method of treating it.

In any case, the Chinese miracle is over. Now China will have to pay for its rapid growth. And well, if he manages to repeat the script of Japan. There are many more difficult countries for him. Technically, it will be possible to save the developed coast by dropping it into the hinterland (and half a billion people live there, so where and to whom it is dumped, there is — not desert, tea) all the catastrophic problems created over a decade and a half. Cities will have to be fenced, sanitary cordons (sanitary in medical, social and military terms) between them and the rest of the territory created, breaking China into two different zones. Moreover, the more problems you have to dump in the outback, the fewer cities on the coast will be able to save. Cyberpunk Blade Runner will become a reality. But in the Chinese version.